Looting Bolivarian-Style

Published by VenEConomy- May 21, 2010

The prices of Argentina’s public debt bonds have fallen, in part, owing to bad management by the Kirchners, but, above all, they have plummeted as a result of the plundering of the pension funds by the Cristina Kirchner administration.
As far as the Venezuelans are concerned, the problem is that President Hugo Chávez is copying whatever bad example he encounters. Now, he is not only copying the Castro-communist model that involves the extermination of the private sector, but he also intends to follow Cristina’s example and attack the savings of the workers in the public sector.
This Thursday, May 20, the Ministry for Planning and Finance announced that it will be issuing a special offer of bonds for savings plans, pension funds, and other public funds amounting to Bs.F.6 billion. With this order, these accounts will be up to their neck in government bonds that yield interest below the market rates. The only possible outcome of this saga is that the workers will find that their savings will completely dry up.
Another act of looting Bolivarian-style that has gone almost unnoticed by the general public has to do with the country’s international reserves. Since that “mere million” in 2005, the government has put more than $45 billion of the international reserves at FONDEN’s disposal, plus another $15 billion from PDVSA. These “mere millions,” had they been well administered, could have been used to back the VenezuelanState’s debts and, more importantly, they could have safeguarded the exchange rate of the bolivar.
What is even more serious is that no one knows precisely what the administrators of the public purse have done with all that money, as, so far, FONDEN has presented no accounts to the country. The consensus among analysts is that practically all those funds have evaporated and are not available to solve the enormous needs of the population.
On top of that, according to the analysts, PDVSA apparently posted a loss in 2009 and it is thought that the profits so far this year are very lean. That is the measuring stick by which one should gauge the cash crisis the government has come up against, and possibly the explanation for the witch hunt that has been unleashed in Venezuela.
But it seems that the looting Bolivarian-style does not end there. In less than ten days, the President has twice threatened the private banks with intervention if they do not increase the number of loans they grant to the people and to his government’s social development projects. “You either give the people loans or you give me the bank. I’ll pay you later and I’ll see how I’ll pay you,” he warned the bankers. The President forgets that the money in the banks belongs to the people who put their savings there.